NexPoint Residential Trust, Inc.

Good day. My name is Ellie, and I will be your conference operator for today. At this time, I'd like to welcome everyone to the NextPoint Residential Trust First Quarter 2024 Earnings Call. All lights have been placed on you to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you'd like to ask a question during this time, simply press star, followed by the number one on your telephone keypad. If you'd like to withdraw your question, please press star and number one again. Thank you. I'd now like to hand over the call to Kristen Fawmish, Investor Relations. You may now begin the conference.

Thank you. Good day, everyone, and welcome to Nexford Residential Trust conference call to review the company's results for the first quarter ended March 31, 2024. On the call today are Brian Mitz, Executive Vice President and Chief Financial Officer, Matt McGrainer, Executive Vice President and Chief Investment Officer, and Bonner McDermott, Vice President, Asset and Investment Management. As a reminder, this call is being webcast through the company's website at nsrt.nextpoint.com. Before we begin, I would like to remind everyone that this conference call contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that are based on management's current expectations, assumptions, and beliefs. Listeners should not place undue reliance on any forward-looking statements and are encouraged to review the company's most recent annual report on Form 10-K and the company's other filings with the SEC for a more complete discussion of risk and other factors that could affect any forward-looking statements. The statements made during this conference call speak only as of today's date and, except as required by law, NXRT does not undertake any obligation to publicly update or revise any forward-looking statements. This conference call also includes an analysis of non-GAAP financial measures. For a more complete discussion of these non-GAAP financial measures, see the company's earnings release that was filed earlier today. I would now like to turn the call over to Brian Mintz. Please go ahead, Brian.

Thank you, Kristen. Welcome to everyone joining us this morning. I'm Brian Mitz, and I'm joined today by Matt McGrainer and Bonner McDermott. I'm going to kick off the call and cover our Q1 results, provide our updated NAV and our guidance for the remainder of the year, which we are reaffirming. I'll then turn the call over to Matt and Bonner to discuss the specifics driving our performance and guidance. Results for Q1 are as follows. Net income for the first quarter was $26.3 million, or $1 per diluted share, on total revenue of $67.5 million. This includes a $31.7 million gain on the sale of old farm that was completed on March 1, 2024. At $26.3 million, net income for the quarter compares to net loss of $4 million, or $0.15 per loss per diluted share for the same period in 2023 on total revenue of $69.2 million. For the first quarter of 2024, NOI was $41.1 million on 37 properties compared to $41.1 million first quarter of 2023 on 40 properties. For the quarter, same-store rent decreased 0.4%, while same-store occupancy increased 0.3% to 94.7%. This coupled with an increase in same-store expenses of 3.6, sorry, 1.8% with an increase in same-store NOI of 4% as compared to Q1 2023. As compared to Q4 2023, rents for Q1 2024 in the same-store portfolio were down 0.1% or $2 sequentially. We reported Q1 Core FFO of $19.6 million, or $0.75 per diluted share, compared to $0.71 per diluted share in Q1 2023. During the first quarter for properties in our portfolio, we completed 59 full and partial upgrades and leased 59 upgraded units, achieving an average monthly rent premium of $240 and a 21.8% return on investment. Since inception for the properties currently in our portfolio, we've completed 8,593 full and partial renovations, 4,829 kitchen and laundry appliances installations, and 12,348 technology packages, resulting in $170, $39, and $43 average monthly rent increase per unit and a 20.9 percent, 51.4 percent, and 37.8 percent return on investment, respectively. NXRT paid a first-quarter dividend of 46 cents per share on the common stock on March 28, 2024. Since inception, we have increased our dividend 124.5 percent. For Q1, our dividend was 1.61 times covered by core FFO with a payout ratio of 56.3 percent. During the first quarter, NXR completed the sale of Old Farm for a sales price of $103 million. This sale generated $49.4 million of net sales proceeds, a 22.1% levered IRR, and a 2.98 times multiple on investment capital. On March 5, 2024, NXRT fully repaid their manager on balance of $24 million on its corporate credit facility. As of March 31, 2024, we had $37.1 million in cash and $335 million of available liquidity on the corporate credit facility. Further, we are pleased to report that we are scheduled to complete the sale of Radbourne Lake in Charlotte, North Carolina later today for gross sales proceeds of $39.25 million. This disposition is expected to retire $20 million of property level debt and generate $18.8 million net sales proceeds. An approximate 19.3% levered IRR and a 3.64 times multiple on invested capital. Given the success of our recent pending sales, their increase in liquidity position, and what we perceive to be an attractive public-private market arbitrage opportunity, where our stock traded above the 7% implied cap rate versus mid to upper fives for the private market transactions. And it's notable to touch on Blackstone's recently announced purchase of Air Communities We initiated a share buyback program to purchase up to $25 million of our shares. To date this quarter, we have purchased approximately 8.5 million shares at an average price of $31.75 per share, which represents an approximately 40% discount to the midpoint of our Q1 NAV estimate. And speaking of the NAV, let's move to that. Based on our current estimate of cap rates in our markets and forward NOI, we're reporting an NAV per share range as follows. $45.91 in the low end, $58.97 on the high end for a $52.44 midpoint. These are based on average cap rates ranging from 5.5% on low end, 6% on the high end, which remains stable quarter over quarter. Moving to guidance, NXRT is reaffirming 2024 guidance ranges for earnings per diluted share, core FFO per diluted share, same-store rental income, same-store total revenue, same-store total expenses, same-store NOI, interest expense and its related components, and reaffirming acquisitions and dispositions as follows. Our core FFO per diluted share, $2.60 in the low end, $2.85 on the high end for a midpoint of $2.72. Same store rental income, 1.4% increase in the low end, 3.2% increase on the high end for a midpoint of 2.3% increase. Same store NOI, negative 2% or 2% decline in the low end, 2% increase on the high end with a midpoint of 0%. So that completes my completed remarks. Let me turn it over to Matt and Bonner for commentary.